Big three put heads together, turn tables on Cerberus

Cerberus will lose stake in Chrysler as condition of Treasury‘s plan. (WSJ) Fate of Wagoner and auto industry decided by Rattner, Geithner, Summers in Roosevelt Room of White House. (WSJ) On eve of G20 meetings, World Bank announces $50 billion program to boost global trade. (Reuters) Fed takes the lead in stress-testing 19 banks. (Bloomberg) …

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What about Cerberus?

President Obama issued an ultimatum to GM and Chrysler today, setting out strict guidelines for the carmakers to meet before obtaining more government aid. Coupled with the forced resignation of GM CEO Wagoner, the Obama administration’s heavy-handed approach to Detroit, as compared to its approach to Wall Street, seems to indicate a double standard. Why …

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Wagoner circled

White House forces Wagoner to resign. (AP) Under investigation, Murtha protégé closes lobbying shop. (NYT) World’s largest private equity firm refuses to disclose returns to SEC. (Bloomberg) Barr, Garrett, Madison named to Treasury posts. (Bloomberg) Greenspan in Financial Times: stock market shows us the way to recovery. (FT) …

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Fly on the wall has explaining to do

US has had government-appointed attorney inside AIG board meetings and on-site since 2005. (WSJ) Cummings and 26 other members demand detailed information on why AIG made full payments to counterparties. (NYT) Gillibrand defended Big Tobacco as lawyer at New York firm during ’90s. (NYT) Treasury releases sweeping regulatory changes; SEC chair says fears of end …

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Officials see policy failures in drugs & finance

Geithner to outline regulatory overhaul today; hedge fund managers Paulson and Cooperman warn against excessive measures. (NYT) US drug war has been a failure, says Clinton in Mexico, blaming “insatiable demand.” (WaPo) In face of worker protests, Corzine gets authority for 2-day furlough. (NJ Star-Ledger) Auto task force will recommend loans rather than bankruptcy; Rattner …

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A closer look at a toxic avenger

To paraphrase Paul Krugman, it looks like the zombies have won. Insolvent banks continue to roam the earth, sucking up unfathomable sums of taxpayer capital, provided to hedge fund intermediaries as nonrecourse loans. The scheme is designed to create inflated “auction” prices by incentivizing investors to over-bid on assets which carry almost no downside risk …

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Social fabric stretched thin

Wall Street expresses anger at policymakers at Future of Finance conference; private equity manager says Washington is “stretching our social fabric.” (WSJ) Specter to oppose EFCA. (Washington Independent) Top hedge fund managers raked in billions in 2008; Simons, Paulson, Arnold top Alpha list. (NYT) Obama tax task force will include AIG director Feldstein, Morgan Stanley …

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Wall Street stages comeback

Administration is “operating on all cylinders” in reaching out to bankers like Wolf, Dimon, Gallogly. (WSJ) Market surges 500 points on news of Geithner plan. (NYT) Senate to table bonus tax bill. (WaPo) Obama nominates Brainard, Wolin for Treasury posts. (AP) IRS probing AIG tax deals. (WSJ) …

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DeLong has a little brother in this fight

Since the Obama administration leaked details of its toxic asset plan on Friday night, the reaction in the blogosphere has been swift and harshly critical: the zombie plans have won, writes Paul Krugman; it’s a Rube Goldberg device for shifting losses to the Treasury, writes James K Galbraith; really bad ideas, writes Atrios. There has, …

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Inflationary expectations

Treasury releases details of toxic asset purchase plan; government hopes generous loans to investors will encourage them to overpay for assets. (NYT) Romer says private investors who participate in toxic asset plan are “the good guys here.” (Fox News) Senate will vote on bonus tax legislation this week; Gregg says practical implications are bankruptcy for …

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Questions on AIG, Goldman, and Deutsche

I want to raise a few points on AIG that don’t seem to be coming up elsewhere, but that need critical attention if we are to understand how this disaster came to pass and who else is implicated. There have been a few reports that AIG stopped selling credit default swaps – the financial instruments …

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Americans’ Ire Grows

By a vote of 328-93, House passes historic bill to tax bonuses at Wall Street firms at rate of 90%; Kramer, Pandit, Boehner opposed. (NYT) Axelrod says Americans don’t care about AIG.   (The Plum Line) Geithner confirms that he asked Dodd to weaken anti-bonus provision. (CNN) 13 TARP recipients failed to pay $113 million …

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